O'Reilly Auto Driving Through

O'Reilly Auto (ORLY - Analyst Report) has an excellent growth strategy with an exposure to both do-it-yourself (DIY) and do-it-for-me (DIFM) segments of aftermarket industry.

On October 29, 2008, O'Reilly Automotive Inc. reported third quarter results for 2008. Sales for the three months ended September 30, 2008, totaled $1.11 billion, up 68% from $0.66 billion for the same period a year ago.

Net income for the third quarter ended September 30, 2008, totaled $41.4 million, down 22% from $53.1 million for the same period in 2007. Diluted earnings per common share for the third quarter of 2008 decreased 33% to $0.31 on 133.1 million shares compared to $0.46 for the third quarter of 2007 on 116.3 million shares.

The company is continuously benefiting from its dual market strategy: strong distribution network and an unparalleled access to auto parts. The company’s recent acquisition of CSK Auto Corporation is expected to boost 2009 earnings and would result in about $100 million in annual cost savings from 2010.

The company is valued at 15.0x our 2008 earnings estimate of $1.54. However, rising competition, high gas prices, slowdown in miles driven as well as overall economic slowdown force us to rate the stock a Hold with a target of $24. This is 15.6x our 2008 earnings estimate.

Read the full analyst report on ORLY